IR Global Disputes – COVID-19: Unprecedented Times, Desperate Measures

The coronavirus pandemic has caused governments across the world to take measures that impact the movement of people rarely if ever, seen in peacetime before. Understandably, this has adversely affected businesses and created a host of employment law issues in every country.

When the first case of coronavirus – or COVID-19 – was reported in Wuhan, China in December 2019, nobody could have guessed that within three months it would spread across the globe at lightning speed. Indeed, from the start of March hundreds of thousands of cases of the disease have been reported in more than 160 countries and territories, resulting in thousands of deaths.

The speed of the spread of the virus – declared a pandemic by the World Health Organization on March 11 – caught governments across the world off guard. And many have since reacted with draconian action. This includes travel restrictions, quarantines, curfews and event cancellations, and advising people to avoid all but essential contact with each other for the foreseeable future.

Of course, this has had a tremendous impact on employment and with employment law in ways that have never been seen before. For instance, with employees being told to stay at home, flexible working has become more common than ever, although in some professions it just isn’t feasible. What this means for employers and employees – especially in terms of payment for those employees who have to take time off because they are sick, to quarantine or self-isolate, or to take care of dependents – has never been tested and different jurisdictions are reacting in different ways.

With the COVID-19 crisis and the response to it among different countries evolving daily, employment lawyers are advising employers on what they can or cannot do to safeguard their businesses and their employees under existing legislation. And the disease is spreading faster than laws can be adopted – although some countries are starting to respond quickly to take care of workers and ensure that businesses stave off bankruptcy.

How are companies responding to COVID-19 (the coronavirus) and what practical suggestions do you have?

Most employers, regardless of size, are working on increasing the availability of virtual work arrangements. There are some examples of large employers that moved quickly so that almost all their employees working from home weeks before the Stay Home Orders began. But some employees are able to work from home and others cannot because of the nature of their job. With the recent Stay Home Order from the Governor of California, and mayors in cities in Northern and Southern California, employers who didn’t prepare for work from home and aren’t in excepted functions are rapidly furloughing and laying off workers who can’t work virtually.

Some US businesses are agile in conducting virtual business and have already set up the technology to facilitate continued business. Others have resisted that trend and are scrambling to get policies and equipment in place to make sure that they have secure access for people who now are remotely working. There are a lot of core businesses and jobs that simply can’t be done from home.

One difference between Nevada and California has been that all employers of all sizes are required in California to provide a minimum number of paid sick days. However, the minimum number across a large part of the non-metropolitan areas of California is three days so it would be impossible for a person to quarantine and be paid for the time needed to isolate and recover. There are areas of the US that have no legally required paid sick leave to date at all.

That is where the new federal Families First Coronavirus Response Act, effective April 3, 2020, helps tremendously with this basic paid leave shortcoming in the US. Along with significant federal funding appropriations to a number of social welfare programs and state unemployment insurance programs across the country, the Act provides two types of paid leave benefits temporarily through the end of 2020. One is two weeks (80) hours of paid sick leave for all employees who need to take time off work for medical treatment, isolation or quarantine, for themselves or to care for others. The second feature is paid family and medical leave at 2/3 pay for all employees working for a minimum of 30 days to take protected leave from work to care for their children who are at home because of school closures. There is a dollar cap on both programs, and it will be paid directly by employers who then offset federal payroll tax obligations (including Social Security) by the amounts they pay for either program. Employers are scrambling now to digest the new law, implement new policies and figure out how to cover the costs with their tax accountants.

The coronavirus is moving faster than the law – how are lawyers responding and adapting to this evolving crisis?

I would echo Laura’s comments. Until mid-March, action on the part of federal and state governments was painfully slow with respect to the rapid spread of the virus. The beginning responses took place on the county and municipal levels – issuing basic guidance and implementing limited restrictions to contain the infection. Few federal efforts occurred while the rest of the world responded with significant measures. The initial legal response was simply Presidential Executive Orders banning foreign nationals entering the US from a growing list of countries. Even that process was weakly implemented with haphazard efforts in screening cross-border movement.

In March, the first significant legislation was issued in terms of the Families First Coronavirus Response Act, as I mentioned earlier. Certain state and municipal governments have jumped into action with Executive Orders requiring people to stay home, limit business activity and make state social resources relating to food, medical care, and housing suitable for isolation. Those measures are fairly drastic compared to what we had before in the US. Businesses are alarmed by the increased costs they will shoulder and its impact on their ability to survive. And most people feel these efforts have come too late to beat the curve of rapidly growing infection rates.

How are specific industries or sectors and their employees impacted and what are the potential legal consequences?

In California, we now have an interesting dilemma involving gig workers that is coming to a head. The state legislature last year made it very difficult to maintain contractor status and not be classified as an employee. Some reclassification occurred in response to the law, although there has been an active protest and effort to change the law back to when it facilitated a growing gig economy.

Now with most government aid focussing on employees, in terms of paid sick leave, extended paid leave and increased access to unemployment insurance, being a gig worker seems much less attractive because there is no social safety net and no universal healthcare. The new Stay Home orders now in effect in most metropolitan areas as a matter of health necessity, have had the effect of crippling hotels, restaurants and bars, especially smaller businesses, and the unemployment rate is jumping in businesses relating to retail, construction, transportation and tourism.

The movie and entertainment industries, along with theatres, distribution and advertising, has come to a standstill. All of that puts tremendous pressure on people living under a political and social system that runs on the values of individualism, entrepreneurial spirit and limited governmental involvement.

With widespread panic and disappointment, many people wonder why the government can’t help more to avoid this pandemic and a related economic disaster.

Get in touch